FOR THE LAST TIME. I AM NOT ASSERTING VIOLATIONS. COPIED AND PASTED FROM THE COURT DOCS.
YOU CAN CONTACT BEGI LAWYERS IF YOU DONT ACCEPT HIS SIGNATURE AS PROOF.
GS’S UNLAWFUL CONDUCT
17. Blackstar paid the principal, interest, and penalties under the Note, as calculated by GS by
wire transfer on November 15, 2023. The wire transfer was accepted by GS.
18. GS does not dispute that Blackstar paid off the Note. Rather, GS argues that it prefers
shares instead of payment.
19. On December 18, 2023, GS was given, by a preliminary injunction—20% of BlackStar’s
Stock (381,890,165 shares)—despite GS also retaining the full amount BlackStar paid by wire to
discharge and satisfy the Note.
20. Indeed, GS Capital has already recovered hundreds of thousands of dollars (at least
$600,000 total) beyond what was already paid by BlackStar—including interest, penalties, and
attorneys’ fees. As the Note was signed on October 11, 2021—this places the $60,000 loan with
a roughly 170% interest rate. Yet this interest rate will be much higher once GS sells more of
BlackStar’s stock that was awarded by preliminary injunction.
FIRST CLAIM FOR RELIEF
(Breach of Contract)
21. BlackStar hereby incorporates each and every allegation contained in the previous
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paragraphs of this Counter-Complaint as though fully set forth below.
22. BlackStar and GS entered into the Agreement, Note, and Amended Note.
23. BlackStar has performed its obligations and satisfied all conditions required of it
relating to the Agreement, Note, and Amended Note, or has been excused from doing so.
24. GS has materially breached the terms of the Agreement, the Note, and the Amended
Note, by the acts alleged above, including, but not limited to, obtaining the conversion of
Blackstar’s stock after the Note was fully paid off.
25. As a result of the actions of the GS, BlackStar has been damaged in an amount in
excess of $600,000, but which amount will be determined at the time of the trial as a result of the
breach of contract.
26. As a result of the actions of GS herein it has been necessary for BlackStar to retain
the services of an attorney and to prosecute this claim. As such, BlackStar is entitled to recover
any and all expenses incurred herein including, without limitation, any and all attorneys’ fees.
SECOND CLAIM FOR RELIEF
(Breach of Implied Covenant of Good Faith and Fair Dealing)
27. BlackStar hereby incorporates each and every allegation contained in the previous
paragraphs of this Counter-Complaint as though fully set forth below.
28. BlackStar and GS entered into the Agreement, Note, and Amended Note.
29. Under Nevada Law, every contract imputes an implied covenant of good faith and
fair dealing. APCO Constr., Inc. v. Helix Elec. of Nevada, LLC, 509 P.3d 49, 53 (2022).
30. GS breached its duty of good faith and fair dealing by performing in a manner that
was unfaithful to the purpose of the Agreement, Note, and Amended Note; and BlackStar’s justified
expectations were thus denied.
31. GS’s breach included, but was not limited to, refusing to provide payoff information
to artificially increase its alleged damages by claiming conversions should have occurred all while
Blackstar was ready and willing to provide a payoff.
32. The aforementioned acts of GS, as described herein, constitute a contractual breach
of covenant of good faith and fair dealing and as a direct and proximate result thereof, BlackStar
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has suffered damages in a sum in excess of $600,000.00.
33. BlackStar has been required to engage the services of an attorney to collect the
monies due and owing, and BlackStar is entitled to recover its reasonable costs, attorneys’ fees, and
interest, therefore.
THIRD CLAIM FOR RELIEF
(Unjust Enrichment)
34. BlackStar hereby incorporates each and every allegation contained in the previous
paragraphs of this Counter-Complaint as though fully set forth below.
35. BlackStar and GS entered into the Agreement, Note, and Amended Note, a result of
which created great benefit to GS.
36. GS accepted the benefit conferred upon it by BlackStar by accepting full payment
under the Agreement, Note, and Amended Note. Despite this, GS retained the full payment made
by BlackStar, and also subsequently retained 20% of BlackStar’s stock.
37. GS accepted and retained the benefit conferred upon it by BlackStar under
circumstances where it would be inequitable to retain the benefit without repayment.
38. As a result of the actions of the GS, BlackStar has been damaged in an amount in
excess of $600,000, but which amount will be determined at the time of the trial.
39. As a result of the actions of GS, BlackStar has been required to retain the assistance
of counsel for the collection of this matter and is entitled to recover any and all fees and costs
associated therewith including without limitation any and all attorney fees.
FOURTH CAUSE OF ACTION
(Conversion)
40. BlackStar hereby incorporates each and every allegation contained in the previous
paragraphs of this Counter-Complaint as though fully set forth below.
41. GS has wrongfully taken control of BlackStar’s stock.
42. GS has wrongfully exercised control over BlackStar’s stock in a manner inconsistent
with BlackStar’s ownership and to the exclusion of BlackStar’s rights in the stock.
43. These actions have thereby specifically deprived BlackStar of access to the stock.
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And GS is using BlackStar’s stock for GS’s own personal use and gain.
44. GS’s conversion is unlawful and against BlackStar’s intent, knowledge, and rights.
45. BlackStar has demanded its property back but to no avail, and this has caused
damages in a sum in excess of $600,000.00.
FIFTH CAUSE OF ACTION
(Declaratory Relief Voiding the Agreement as Illegal Under Section 29(b) of the Securities
Act)
46. BlackStar hereby incorporates each and every allegation contained in the previous
paragraphs of this Counter-Complaint as though fully set forth below.
47. A justiciable controversy exists between the BlackStar and GS regarding the validity
of the Note.
48. BlackStar has a legally protectable interest in this controversy.
49. The Note here is void because its operation violates federal securities law for several
reasons, including GS’s lack of registration and its failure to comply with SEC Rule 144, which
establishes that securities acquired directly or indirectly from the issuer, or from an affiliate of the
issuer, in a transaction or chain of transactions not involving any public offerings are restricted
securities. To comply with Rule 144, a person ordinarily must meet numerous requirements
concerning public information, holding periods, number of shares, manner of sales, and notice to
the SEC, none of which GS Capital complied with here. More specifically, GS, once it received
more than 4.99% of Blackstar’s total common stock, failed to hold it for the required period, and
generally failed to follow the SEC rules that regulate affiliates. GS Capital also violated federal
securities law by failing to register as a securities dealer with the Securities and Exchange
Commission (the “SEC”) or to associate with a registered dealer.
50. GS Capital then obtained shares of BlackStar directly from BlackStar after
converting debt securities through the convertible Note here. By failing to register, GS avoided
certain regulatory obligations for dealers that govern their conduct in the marketplace, including
regulatory inspections and oversight, financial responsibility requirements, and maintaining books
and records.
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51. The type of misconduct GS has engaged in is the subject of current investigations
and enforcement actions by the SEC. As one example, here is a press release covering the penalties
and disgorgement of profit against a company who sold penny stock without registering.
52. Section 29(b) of the Exchange Act, 15 U.S.C. § 78cc, provides that:
Every contract made in violation of any provisions of this title or of
any rule or regulation thereunder, and every contract (including any
contract for listing a security on an exchange) . . . the performance
of which involves the violation of, or the continuance of any
practice in violation of, or the continuance of any relationship or
practice in violation of, any provision of this title or any rules or
regulations thereunder, shall be void.
53. Where a contract involves a “prohibited transaction,” involving a party in privity of
contract with the defendant, and the injured party is within the class of persons the law was designed
to protect, a party may void a contract.
54. As such, a real and justiciable controversy exists between BlackStar and GS
concerning whether the terms Agreement and Note are void and if disgorgement is necessary.
55. Such controversy is ripe for adjudication.
56. The Court should declare the Note void and require GS to return all the benefits of
the bargain, including the wrongfully obtained shares.
PRAYER FOR RELIEF
Wherefore, BlackStar prays for judgment against GS for the following:
1. For a judgment in favor of BlackStar and against GS arising from the allegations in
this Counter-Complaint for damages to be provide a trial;
2. For compensatory damages in an amount to be proven at trial;
3. For declaratory relief as described in this Counter-Complaint;
4. For punitive damages in an amount to be proven at trial;
5. For interest on all damages at the rate allowed by applicable Nevada law; and
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6. For attorneys’ fees and costs incurred by BlackStar in bringing this action, as
authorized by applicable law.
DATED this 27th day of February, 2024.
BROWNSTEIN HYATT FARBER SCHRECK, LLP
By:/s/ Eric D. Walther
MAXIMILIEN D. FETAZ, ESQ.
ERIC D. WALTHER, ESQ.
100 North City Parkway, Suite 1600
Las Vegas, Nevada 89106
HAYNES AND BOONE, LLP
IAN RAINEY, ESQ. (pro hac vice forthcoming)
BRENT R. OWEN, ESQ. (pro hac vice)
ANNIE NICHOLSON, ESQ. (pro hac vice forthcoming)
675 15th Street, Suite 2200
Denver, Colorado 80202
Attorneys for Defendant/Counter-Claimant Blackstar
Enterprises Group, Inc.
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